Replacement

Dynegy Inc. is the only gas-related company so far to publiclypropose an alternative to FERC’s notice of proposed rulemaking(NOPR) that seeks to institute industry-wide auctioning ofshort-term capacity in return for lifting the price cap on thatcapacity. “There’s nothing else that’s been made public,” saidPeter G. Esposito, vice president and regulatory counsel.

Inadequate reserve replacement last year should set off an alarmin the gas industry given continuing increases in gas demand,according to a new report by Arthur Andersen and John S. HeroldInc. Proved domestic gas reserves were essentially unchanged in1997 despite a 24% increase in extensions and discoveries to 10.1Tcf, the highest level of drillbit gas reserve additions in thefive-year study period, according to the study titled U.S. UpstreamPerformance Trends. The study noted, however, that negative reserverevisions of 1 Tcf, including a 623 Bcf downward revision by EEXCorp. and smaller downward revisions by Amoco, Mobil and PioneerNatural Resources, are included in the figures.